1. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 28 – Consumer and Health Protection Bilateral screening: Chapter 28 PRESENTATION OF MONTENEGRO Brussels, 15-16 April 2013

2. Chapter 28: Consumer and Health Protection Council Directive 99/44/EC of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees Zvezdan Čađenović Union of Employees zcadjenovic@yahoo.com M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 28: CONSUMER AND HEALTH PROTECTION

3. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Contents Chapter 28: CONSUMER AND HEALTH PROTECTION  Relevant Acquis  National implementing legislation  Institutional Framework  Level of transposition (key rules)  Enforcement  Future activities

4. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Relevant acquis  Council Directive 99/44/EC of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees, as last amended by Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights Chapter 28: CONSUMER AND HEALTH PROTECTION

5. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union National Legislation  Law on Consumer Protection, OG RMN No. 26/07 (Art. 2 [2, 8,, 11, 14, and 24], Art. 19 to 27, Art. 112, Art. 126, Art. 127 [6], Art. 129(1) [10 and 11], Art. 130(1) [4] and 135, LCP), aims to ensure a uniform minimum protection of consumers in respect of certain aspects of the sale of goods and associated guarantees in B2C contracts  Law on Obligations, OG MN No. 47/08, subordinated application (Art. 486 to 508 conformity, Art. 509 to 515 guarantee), general contract law applicable in B2B, B2C, B2P, and P2P transactions.  Law on Internal Trade, OG RMN, No. 49/08, Art. 6 expands on defining who can be cought under term „trader“, and provides for further compliance with Directive definition of „seller“ Chapter 28: CONSUMER AND HEALTH PROTECTION

6. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Institutional Framework  Beside MoE and Authority for Inspection Surveillance, other main institutions and stakeholders: -MoJ, in charge for general contract law and legislative development actions -Courts, individual complaints, -Arbitration Board for Out-of-court Settlement of Consumer Disputes, ADR scheme for consumer protection Chapter 28: CONSUMER AND HEALTH PROTECTION

7. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules I) Level of transposition: High  Definitions (Art. 2.[2, 8, 11, 14, and 24] LCP): -Goods - tangible things that may be placed on the market, including also the facilities that may be used in accordance with this Law (no distinction to “movable” goods, thus it includes immovable property; No transposition of term: “consumer goods” instead use of general term: “goods”, but supplemented with definition of “consumer contract”) -Consumer - natural person who buys, orders, accepts, uses goods or services, including public services, for non-business, namely non-professional purposes, or to whom the offer for a product or service is targeted; -Producer - a person who, practicing its business activity, manufactures or produces the goods or provides services or persons designated as producers by attaching their name, trademark or other recognizable mark to a person whose activities may impact on the safety of goods when they are placed on the market; Chapter 28: CONSUMER AND HEALTH PROTECTION

8. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules II)  Definitions (Art. 2.[2, 8,, 11, 14, and 24] LCP): -Trader - a person who sells goods or provides services to consumers (no transposition of wording “in the course of his trade, business or profession”, although Art. 6 of the Law on Internal Trade to certain extent eliminates this gap) -Warranty - a document that accompanies the goods and contains the data prescribed by law (partially transposed; to be observed in conjunction with Art. 19 to 21 LCP) -Repair, no definition in LCP (Art. 25 (1) LCP provides for consumer to “request that flaws (defects) in the product are remedied” which corresponds to bringing the goods in conformity. -Consumer contract shall mean a contract concluded with a consumer or consumer group Chapter 28: CONSUMER AND HEALTH PROTECTION

9. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules III)  General Scope: -LCP provides for specific provisions on conformity and guarantee regarding sale of products in consumer contracts (Art. 2 [1] LCP: product shall mean goods or service that may be circulated, including also public service); -As a consequence, LCP applicable also on services and immovable property.  Exceptions to certain “goods” (Art. 1 (2) (b) indents 1-3, Directive), partially transposed: -goods sold by way of execution or otherwise by authority of law (Art. 495 LoO: “holder of goods sold at a compulsory public sale would not be held liable for its non-conformity; -water and gas where they are not put up for sale in a limited volume or set quantity, not transposed -Electricity, not transposed Chapter 28: CONSUMER AND HEALTH PROTECTION

10. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules IV)  Conformity requirements, transposed with certain variation in wording (Art. 487(1) [1 to 6] LoO ) -Criteria transposed as “negative presumption” of conformity (lack of conformity”, i.e. products are presumed not to be in conformity if the criteria stated are met. -Instead of “lack of conformity with the contract “ law defines “material flow on a product”  Provision on goods to be installed (Art. 487(1) [7] LoO ) Chapter 28: CONSUMER AND HEALTH PROTECTION

11. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules V)  Exclusions of trader liability in case of Public Statements (Art. 487 (2) LoO)  Exclusion of matters of which consumer is aware & in case of materials supplied by consumer, partially transposed (Art. 488 (1) and (2) and 675 (1) and (2) LoO), -In contrasts to Directive Art. 2(3), LoO limits the exclusions of matters of which consumer was aware to only 2 out of 6 conformity criteria found in Art 487 (1) (eligible under Art. 8(2) Directive, and widens the protection of consumer consumers) Chapter 28: CONSUMER AND HEALTH PROTECTION

12. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules VI)  Consumers’ rights (remedies) in cases of non-conformity, partially transposed (Art. 25 LCP): -No hierarchy, thus consumer may at own choice request from trader: -Replacement - product is replaced by a new product, or -Repair - request that flaws in the product are remedied, or -Reduction in the price - price of the product be reduced in proportion to the flaw, or -contract rescinded - return the product and be refunded for the price paid.  Additional rights (remedy) in cases of non-conformity (Art. 496(2) LoO): -In any of the cases consumer is entitled to claim damages as well; Chapter 28: CONSUMER AND HEALTH PROTECTION

13. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules VII)  Condition - Free of charge to bring the goods in conformity (Art. 496(4) LoO), -The costs for the elimination of the flows and delivery of other good without flows shall be born by the seller. -Aligned with ECJ Case C-404/06. Quelle AG. v. Bundesverband der Verbraucherzentralen und Verbraucherverbände Chapter 28: CONSUMER AND HEALTH PROTECTION

14. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules VIII)  Time limits (two year time limits for seller liability), not transposed: -immediately after consumer becomes aware of the non-conformity (flaw) of the product and not later than six months after taking over the product (Art. 26(1) LCP). -rights of a consumer (notifying a seller in due time) shall be forfeited after the expiration of 1 year, counting from the day of communicating the notification to the seller. This period can be expanded only in a case that the buyer was prevented from using its rights because of seller's deceit (Art. 508(1) LoO).  Presumption of non-conformity in first 6 months, not transposed -The seller shall also be liable for the defects that appear after the transfer of the risk to the buyer if they are result of reasons that has existed before that (Art. 486(2) LoO). Chapter 28: CONSUMER AND HEALTH PROTECTION

15. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules IX)  Time limit Option - duty to notify lack of conformity within 2 months, partially transposed -Art. 26 (1) LCP – duty to notify flow on the product not latter than 6 months  Time limit Option – rules for second-hand goods, not transposed Chapter 28: CONSUMER AND HEALTH PROTECTION

16. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules X)  Recital 15 Option - Rescission and period-of-use allowance, (Art. 127 (4), in conjunction with Art. 505 LoO): -in case of termination of the contract each party shall owe to the other compensation for benefits enjoyed for the time being from that what he is obliged to restitute, that is to compensate.  No rescission for ‘minor’ lack of conformity, partially transposed -Art. 486(3) LoO stipulates that: An insignificant material flow shall not be taken into consideration. -Contrary to the Directive, national legal framework (LoO trough subordinated application to LCP) excludes consumer remedies not only in terms of rescission, but also in respect of other remedies in case of “insignificant non-conformity”. Chapter 28: CONSUMER AND HEALTH PROTECTION

17. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules XI)  Guarantee (Art. 19 to 22 LCP and 509 (2, 3 and 4) LoO)  Additional national provisions: -Possibility to rescind the contract if repair or replacement is not possible in reasonable time, or even if consumer is not accepting offered solution; -burden of proof that the guarantee was delivered is on trader (Art. 19(3) LCP); -language requirement (Art. 82 LCP); -consumer is entitled to claim damage for the period during when he could not use the goods (from the moment of demanding repair or replacement to their effecting) (Art. 510 (2) LoO) -guarantee period shall begin to run anew from the day of replacement, or restoring the repaired object (Art. 511 (2) LoO) Chapter 28: CONSUMER AND HEALTH PROTECTION

18. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules XII)  Right of secondary redress, (Art. Art. 148 (6) LoO): -general principle of contract law - whoever causes injury or loss to another shall be liable to redress it, unless he proves that the damage was caused without his fault.” -Case law of MN courts (e.g. guarantees)  Mandatory nature of the provisions, (Art. 5(1) and 64 (1) and 66 (1) LCP): -General principle - A consumer may not waive the right set out in this Law (Art. 5(1) LCP). -Unfair contract provisions shall be considered to be provision by which consumer waives the rights provided by this Law, whereas unfair provisions in consumer contracts shall be null and void (Art. 64 (1)[20] in conjunction with Art. 66(1) LCP) Chapter 28: CONSUMER AND HEALTH PROTECTION

19. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Enforcement I  Authority for Inspection supervision: -Authorised to issue orders toward traders in respect of consumer rights relating to non-conformity and guarantee (Art. 126(1) LCP) -Temporarily ban sale of products in case that guarantee certificate : -a) does not accompany the product in circulation and when it does not contain the all required data (Art. 127[6] LCP) -b) does not meet language requirement (Art. 127[12] LCP) -Initiating misdemeanour procedure in case of infringement of the Law (LCP Art. 129(1) [10 and 11] - (fines: 1.000 to 15.000 Euros for legal entity; 150 to 1.500 Euros for responsible person in legal entity; 400 to 4.000 Euros for entrepreneur), Art. 130(1) [4] (fines: 600 to 10.000 Euros for legal entity; 100 to 1.000 Euros for responsible person in legal entity; 300 to 3.000 Euros for entrepreneur) and 135) Chapter 28: CONSUMER AND HEALTH PROTECTION

20. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Enforcement II  Courts : -individiual complaints; -collective complaints: individual consumer, consumer organizations or other interested parties can submit a complaint with a competent court against individual trader, two or more traders involved in the same economic sector, or traders’ associations, in order to abate the provisions of the contract (pre- formulated contract terms) if these are waiving rights of the consumers in respect of non-conformity and guarantee (Art. 114 LCP).  Arbitration Board for Out-of-court Settlement of Consumer Disputes Chapter 28: CONSUMER AND HEALTH PROTECTION

21. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Future plans  ME in 3 rd and 4 th quarter 2010 initiated a detailed screening of 11 CP directives (including Directive 99/44/EC), supported by IPA 2009 Project (AIM)  Guidelines for Harmonization of Montenegrin CP legislation (blueprint for new LCP) http://www.mek.gov.me/ResourceManager/FileDownload.aspx?rid=126923&rT ype=2&file=Guidelines%20for%20Harmonisation%20of%20Montenegrin%20% 20CP%20Legislation.pdf http://www.mek.gov.me/ResourceManager/FileDownload.aspx?rid=126923&rT ype=2&file=Guidelines%20for%20Harmonisation%20of%20Montenegrin%20% 20CP%20Legislation.pdf  Draft new Law on Consumer Protection, fully harmonized with Directive 99/44/EC and ready to be adopted by GoM (Art. 42– 53 Draft LCP) : Chapter 28: CONSUMER AND HEALTH PROTECTION

22. Thank you for your attention. QUESTIONS